Best online payroll software for UK small businesses

Why did we pick Sage Payroll?

We found that every aspect of Sage Payroll has been designed with the end user in mind. This means that taking care of your employees’ pay, tax, and pension contributions – even when payroll year end approaches – doesn’t need to be a headache.

Sage Business Cloud offers a range of HR tools, so its payroll provision can integrate seamlessly with other admin tools and ensure you maintain consistency in your financial records. Most recently, Sage has made its AI-powered assistant Sage Copilot available in the UK.

With Sage you can collaborate in real-time on payroll reports with your accountant, make RTI submissions with one click, and automatically track your payroll data with Sage Accounting. Sage’s built-in corrections feature allows you to amend data without rerunning pay runs. Other providers, including Xero, require you to post an unscheduled pay run to correct the mistake quickly, and file it with STP.

Sage Payroll’s weekly pay breakdown

What are the limitations of Sage Payroll?

During our research, we found that existing Sage Payroll users have complained about Sage Payroll’s month-end and year-end reports. These are apparently hard to view and often need cleaning up and correcting – particularly annoying if you’re an accounting firm taking care of payroll for a client.

How much does Sage Payroll cost?

Prices start from £10 per month + VAT for teams of fewer than five, but there are three tiers available that grant access to more advanced features. You can add up to 100 employees in total to each plan.

• Payroll Essentials (£10 p/m for five employees + £2 per each additional employee)
• Payroll Standard (£20 p/m for five employees + £4 per each additional employee)
• Payroll Premium (£30 p/m for five employees + £6 per each additional employee)

It’s worth knowing that Sage is currently running a promotion where you can get 90% off for 12 months.

Why did we pick Moorepay?

Moorepay is better known as a payroll service, but its cloud based payroll software has a slick design and easy-to-use interface, making things super simple for your in-house payroll team. It also boasts a top-tier contact team, making it our number one choice for SMEs needing additional support.

Moorepay’s mobile app (which has seen some recent updates in April, with new restricted access options for leavers), makes it ideal for remote and hybrid working teams to process payroll on the move. The training and onboarding process is the most thorough of all the competitors we’ve reviewed, and guarantees to get you up and running with the software effortlessly.

When we tested the software, we found that Moorepay is also HMRC-compliant, BACS-approved, and auto-enrolment ready. Plus, its standout feature is its people analytics, such as the real-time, insightful dashboards and data-driven graphs.

Moorepay’s People Dashboard

What are the limitations of Moorepay?

Moorepay’s payroll software is more suited to medium-sized businesses, so its cost will outweigh the benefits for businesses with 2 to 30 employees. However, once you scale into the SME category, Moorepay’s payroll software is a serious contender for the top spot.

Moorepay and ADP are prominent HR and payroll providers, but if you’re looking for a provider that is more globally-oriented, ADP might be a better bet for you.

How much does Moorepay cost?

Moorepay does not publish upfront costs on its website, instead it will provide customers with a bespoke quote. Haggling for the lowest possible cost will help to score a big saving for your business and strengthen your cash flow.

Why did we pick ADP?

ADP’s cloud based payroll offering iHCM combines two of small businesses’ biggest responsibilities: payroll and HR. Organisations with a lot of changing rotas, for example hospitality businesses, will find ADP really helpful for tracking employee hours and monitoring more specialist payroll tasks like bonuses.

ADP’s cloud based payroll software iHCM is an all-in-one solution that is simple to implement, has an easy-to-use interface, and lets you process payroll accurately through process automation. We particularly liked the simplicity of running payroll reports, which can be done in just two steps.

Automations are also a strong point, with emails being automatically sent to all involved parties when any payroll process is completed. ADP is also our recommended provider for businesses that need to integrate online payroll software with other solutions, like small business HR software and time and attendance services.

ADP’s pay and tax dashboard

What are the limitations of ADP?

Customer feedback suggests that ADP’s contact team can reportedly take a while to get back to users – frustrating if you encounter a payroll error that needs fixing promptly, such as during month-end.

Business users can contact ADP through the helpline, but there doesn’t seem to be any other sales assistance channel available online.

How much does ADP cost?

Like Moorepay, ADP does not reveal its pricing and instead will provide customers with a bespoke quote.

Why did we pick Clear Books?

Clear Books is  our top recommendation for microbusinesses or side hustles that have inconsistent cash flow month-to-month. This is thanks to its impressive flexibility: letting you adjust the number of employees on its subscription at any time with any number of employees (unlike Sage Payroll).

What’s more, if a business owner decides to change payroll providers or move to managed services, they can cancel their subscription at any time. Aside from Clear Books’ flexibility, it also offers a click-to-pay feature, allowing employers to save time and pay all their staff at once, rather than entering details manually.

Payslips, P45s and P60s with company logos and colours can be generated with ease in seconds, which makes onboarding new recruits much easier if you have a higher staff turnover. Integration with Clear Books accounting software also lets you manage and track expenses and tax with ease, which means it rivals Moorepay in terms of financial reporting.

Clear Books’ monthly dashboard

What are the limitations of Clear Books?

While it’s a great choice for microbusinesses, more complex payroll tasks are unsuitable for this platform. For example, if you make a mistake with Clear Books you’ll need to undo all periods back to (and including) the incorrect period for these employees.

This increases the risk of users making a mistake and potentially incurring a fine from HMRC. Sage Payroll makes the process much simpler, by comparison.

How much does Clear Books cost?

As well as flexibility, Clear Books is also an affordable solution with transparent pricing. Plans start from a minimum of two employees for £6.48 inc. VAT per month. Right now, Clear Books is running a promotion where you can get a 50% discount for the first three months.

So, if you need a subscription for 10 employees, it will be £32.40 inc. VAT per month, and just £16.20 inc. VAT for the first three months.

Why did we pick Xero?

Xero has a range of excellent features to make payroll processing as simple as possible, and its automation features are unrivalled. The software automates tax, pay, pension, and even leave calculations, letting you focus on other admin tasks.

Automations make the whole process of payroll much easier, as time-consuming tasks can be managed without business owners needing to constantly check on them, giving them more time to run the company. Xero is also HMRC-recognised and can automate RTI submissions.

The Xero Me mobile app is an excellent, easily accessible feature that will help you to save time on expense management and other tasks relating to staff pay. The employee self-service feature is also incredibly handy for viewing payslips and requesting leave online, saving you the hassle of integrating a holiday request system with other software.

Xero’s payroll overview

What are the limitations of Xero?

One potential drawback in using Xero for your payroll software is that it’s only available as part of the Xero accounting package – which could be a problem if you’re already signed up for existing accounting software.

The good news is that Xero is one of the top accounting software brands on the market. In fact, we named it one of our top picks for the best small business accounting software. So, if you don’t already have existing accounting software, Xero is a great option for businesses starting from scratch.

How much does Xero cost?

Xero is a premium payroll option compared to other brands, but don’t forget this is because you’ll be getting all of that accounting wizardry as part of the package. However, if you’re looking for a more budget-friendly solution we’d suggest Clear Books instead.

• Xero Ignite (£16 per month) payroll is £1.50 per person
• Xero Grow (£33 per month) offers payroll for one employee, and £1.50 per additional person
• Xero Comprehensive (£47 per month) offers payroll for five employees, and £1.50 per additional person
• Xero Ultimate (£59 per month) offers payroll 10 employees, and £1 per additional person

Until the 30th of June, you can also get 90% off any of the above plans for the first six months.